A few thoughts on taxes

Jack Bernard, a retired SVP with a large national healthcare firm, has worked extensively with hospitals across the nation regarding cost containment and insurance. He was also the first Director of Health Planning for the state of Georgia.

The American public hates to pay taxes but loves more services and spending. Maybe that is why Trump and company pushed through the recent tax “reform” scheme, increasing the deficit by over a trillion dollars while cutting taxes big time for the wealthy and corporations with very little for everyone else.
To make matters even worse, our fiscally irresponsible Congress approved a wacko bi-partisan “wish list” budget. This ridiculously lavish spending bill, which Trump quickly signed, will increase the deficit even more. It seems like the only thing that Trump and Congress can agree on is increasing our debt and deferring payment onto our children.
What would have been much more helpful is if Congress and our President, who incredibly refuses to divulge his own taxes, would have plugged up the corporate loopholes that currently exist while cutting both military and domestic spending and/or increasing taxes in order to balance the budget. That is exactly what Clinton and a Republican Congress did in the 1990s in a bi-partisan deal that helped rather than hurt America. Due to space, I will save the budget cutting conversation for another time.
There are a hundred examples of tax loopholes that are well-known and should be plugged. Here are just a few.
Ten percent of Americans own 80 percent of the stock. Wealthier Americans also have an undue influence on politicians. That is why the capital gains tax is a flat tax, only 15 percent for most, with a max of 20 percent for the rich (versus a max of 37 percent for earned income). Private equity billionaires are using the obscure “carried interest” provision to declare their compensation as capital gains. These same billionaires can also deduct interest costs for mortgages on their yachts or lavish second homes.
Corporations can write off the expense of moving plants overseas. They also start overseas shell subsidiaries to cut their tax bill.
Thanks to the new tax reform bill, wealthy individuals can now even begin to incorporate themselves, paying the 21 percent maximum rather than 37 percent.
As Vox said (12-21-17), “The 37 percent top rate is just a sticker-price for the wealthy and well-advised, up for negotiation. Everyone else will still pay full-price.”
Stopping corporate welfare is another obvious step. For example, why are we giving tax breaks worth $20 billion to profitable oil companies?
Some of the smaller loopholes are obvious but politically hard. For example, support the IRS in cracking down on the abuse of the not-for-profit category.
Organizations applying for tax exempt status must be non-profit, but, by statute, they are also not supposed to engage in lobbying if they want to get and keep their IRS tax exemptions under section 501-c-4 of the IRS statutes.
By harping on the IRS’s shortcomings and ignoring its mission, politicians and the media are encouraging the bureaucrats to take the easy way out, and that means approving tax exempt status for lobbying groups, both conservative and liberal. With all of the self-interested billionaire and corporate money now flowing into our political system, all citizens, regardless of party, should want the IRS to make sure that these groups are not shills for candidates and causes as prohibited by law.
This last point deserves more explanation. Under several Congresses, the IRS budget has been slashed. There has been little public outcry. After all, who loves the IRS?
We do not have to love the tax collector to know that he is essential to preserving our democracy. No loyal American wants us to become Greece.
According to Inc. Magazine (5-19-17), “Over the past decade, the IRS has been gutted, and that’s despite that fact that the department collects $4 for every $1 spent on their resources.”; “The tax gap is currently $450 billion, a number that has steadily increased since 2001 when it stood at $150 billion, despite political rhetoric that there was action being taken to reduce it. Because of these cuts, we’ve seen approximately 300,000 fewer collections and far fewer audits each year. The audits that are happening are taking longer and longer, and that means less money in the Treasury, which truly does affect everyone.”
Eliminating these loopholes is not a technical problem. It is a political one and it is up to each of us to apply pressure on our elected officials to at long last do the right thing.

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